Can I sue/revoke an agreement with an accountant due to malpractice?
Question Details: I am a small business owner of several shops. I "contracted" an accountant both for taxes and for business. We didn't pay them because we verbally agreed they would receive a percentage of the company as an investor. No contract was legally written. We recently found out that they didn't process the federal and state taxes correctly and now we have to pay back taxes, plus many fees. They want out of the investment and now are demanding their percentage. Are they entitled to money? Can I counter sue if they sue me or are they bluffing with a lawsuit?
Oral or unwritten contracts are enforceable: a contract does not have to be written (with certain exceptions: contracts to buy real estate must be in writing, for example).
However, if the agreement was that they would receive compensation in exchange for (among other things) doing your taxes, and they did the taxes incorrectly, costing you money, they breached or violated the agreement: implicit in the agreement that they would be compensated (e.g. get a percentage of the company) is the requirement that they do the taxes to acceptable professional standards. A failure to do them properly therefore would be a breach of that obligation and allow you to terminate the agreement without proving them the compensation (share of your business).